International Power’s results were accompanied by confirmation of a tie-up with GDF-Suez to create the world’s largest independent power generator and a bumper special dividend of 92p a share to compensate its shareholders for loss of control of the business.
GDF Suez will transfer its Energy International portfolio, comprising assets in the US, Canada, the UK, Turkey, Brazil, Chile, Thailand and the Middle East to International Power, in return for 70 per cent of the enlarged share capital, with shares in issue rising from 1,523m to 5,077m. Analysts estimate the new shares will be issued at between 315p and 325p a share (giving a value of around £16bn for the combined entity) and the group hopes to put the deal to bed by the end of the year.
The enlarged group will be called New International Power and is expected to produce additional annual cash profits of £872m by 2013. Annual pre-tax synergies are forecast to reach £165m by 2016, with 75 per cent of this figure to be achieved in the second year following completion of the deal. This will be made up £105m in operating synergies and £60m in financial savings, as the new group hopes to receive an investment grade credit rating. International Power’s chief executive, Philip Cox, and finance director, Mark Williamson will head up the management team while GDF’s Guy Richelle will become chief operating officer.
Other than the deal news, International Power's first-half results were peppered with both positive and negative points. Operating profits were down 5 per cent to £524m as the US operations struggled. But adjusting for the sale of Czech business last year, profits edged up 2 per cent on a constant currency basis and with the group’s cash flow robust, the board was able to increase the interim divided modestly.
International Power (IPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 371p | MARKET VALUE: | £5.65bn | |
| TOUCH: | 371-372p | 12-MONTH HIGH: | 384p | LOW: 248p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 7 | |
| NET ASSET VALUE*: | 301p | NET DEBT: | 99% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 2.70 | 574 | 25.9 | 4.25 |
| 2010 | 2.36 | 285 | 13.1 | 4.39 |
| % change | -12 | -50 | -49 | +3 |
Ex-div: 29 Sep Payment: 28 Oct *Includes intangibles of £1.04bn, or 68p a share | ||||
